Talk Back

By Harper Willis

A DOW JONES NEWSWIRES COLUMN

Wayne Blanchard got a call a few years ago from a man in his early 60s, who had lived with–and depended on–his parents for his entire life. The parents had died.

The son didn’t work and hoped that Blanchard, founder and principal of Money Professionals Group LLC, a fee-only financial planning and investment advisory firm in Orlando, Fla., could figure out a way for him to live off his parent’s $650,000 estate.

No easy task, but this made it harder: The man had obsessive-compulsive disorder, as well as Tourette syndrome. Blanchard’s challenge would be trying to secure the future of a client whose ability to make sound financial decisions might be impaired.

In fact, the man thought he was in great financial shape, and was even shopping for a sailboat.

By Mark Klimek
    A Dow Jones Column

Focus Financial Partners is a New York-based partnership of independent wealth-management companies. Rich Gill, who heads up the firm’s business development and acquisition activities, said registered investment advisers, or RIAs, looking to grow by hiring “breakaway brokers” from the wirehouse world need to tread carefully to take advantage of this opportunity.

Q: There has been a great deal of discussion about the opportunity for RIAs to attract breakaway brokers leaving wirehouses. What do RIAs need to understand if they want to bring one or more of these brokers aboard?

A: RIAs often don’t start out understanding just how different a world the ex-broker is coming from. There are challenges just in speaking the same language. For example, an ex-broker could come to an RIA and say his business mix is 80% fee-based–but in the RIA’s world, he’s really more like 30% fee-based. For RIAs, fee-based means having an advisory agreement in place and a set fee schedule. In the brokerage world, fee just means recurring revenue–which could be annuity trails, 12-B1 fees and C-shares. Brokers are still compensated as product salespeople. Their compensation differs by product, and the economics of their business is driven by the product mix. For RIAs, who focus on revenue and cash flow, this notion of production is foreign.

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By Kristen McNamara
   Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)–A draft financial-service reform proposal unveiled Tuesday by Sen. Christopher Dodd (D., Conn.) won applause from financial advisers and state regulators.

“The draft legislation’s treatment of issues that would directly affect investment advisers represents a very thoughtful and knowledgeable approach,” the Investment Adviser Association said in a statement.

The 1,100-plus page document circulated by Dodd, chairman of the Senate Banking Committee, calls for brokers who act as investment advisers–meaning those who provide ongoing investment advice–to register as investment advisers and be subject to the Investment Advisers Act of 1940. This would include a fiduciary duty to act in their clients’ best interest.

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   By Shelly Banjo
   A DOW JONES NEWSWIRES COLUMN

NEW YORK (Dow Jones)–Results-minded philanthropists are increasingly turning to their financial advisers for help choosing the highest performing nonprofits to direct their donations.

With many advisers already giving advice on investments, estate planning, taxes and even where to purchase a car, providing expertise in a client’s particular area of charitable interest can be challenge.

To help advisers answer these questions for their clients, organizations and research firms are rolling out services such as philanthropic portfolio analysis, social impact measurement reports and information exchange networks to help advisers drive investors to charities that have garnered proven results. Continue reading…

 By Max Alexander 
A DOW JONES NEWSWIRES COLUMN 
 
When a land dispute threatened to tear a family apart, financial adviser Ben Ledyard stepped in with a novel solution that made a whole township happy.

Two sides of a family owned more than 600 acres of undeveloped land in southeastern Pennsylvania that was worth at least $3.5 million – many times that amount if it were developed. When the matriarch on one side of the clan died, her heirs were staring at an estate tax bill (based on the value of half the land) they couldn’t possibly afford. Their solution was to sell the land to a developer.

Not so fast, said the other side of the family. They wanted to keep the land undeveloped, but they couldn’t afford to buy out the other side of the family either.

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By Kristen McNamara
A DOW JONES NEWSWIRES COLUMN

NEW YORK (Dow Jones)–Financial advisers are stepping in when companies stop matching 401(k) retirement plan contributions.

They’re encouraging clients to continue saving and, in some cases, they’re taking a second look at the types of retirement accounts clients are using.

More than a quarter of U.S. companies have modified, or intend to modify, the matching contribution feature in their 401(k) plans this year, according to a recent Grant Thornton survey of more than 280 companies. Two-thirds of those respondents said they will eliminate the match entirely, and nearly a quarter plan to reduce – but not completely eliminate – their matching contribution. Roughly one in 10 plan to increase their match.

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A Dow Jones Newswires Column by Nate Hardcastle profiles  a Chicago financial adviser who survived tough professional and personal times.

In part:

  Chicago financial adviser Don Duncan, 50, retired in 1997 from a lucrative position as a mutual fund manager so he could spend more time with his wife and children. Rather than tap his retirement funds, he started two businesses: a financial advisory practice called D3 Financial Counselors, and an investment-technology consulting firm.

  “The tech consulting paid the bills while I got the advisory practice up and running,” he says.

  But Duncan was about to enter a maelstrom of financial and emotional shocks that would batter his personal life, decimate his savings and threaten his fledgling advisory business. The first blow came in 1998, when his wife of 21 years served him with divorce papers, kicking off a messy and expensive four-year legal battle.

  Business life went better – for a time. Duncan’s advisory firm grew quickly, allowing him to give up the tech-consulting business at the end of 1999, just before the post-tech-bubble bear market hit. “My clients’ portfolios held up fairly well,” he says. “But no one wanted to talk about investment planning anymore.”